What is the history of Iowa’s state-owned liquor stores?

After Prohibition was repealed at the federal level in 1933, Iowa’s 1934 legislature passed a sweeping 89-section bill entitled the “Iowa Liquor Control Act” (45 ExGA, Chapter 24) which took effect on March 8, 1934. The first section read: “This act shall be deemed an exercise of the police power of the state, for the protection of the welfare, health, peace, morals and safety of the people of the state, and all its provisions shall be liberally construed for the accomplishment of that purpose, and it is declared to be the public policy that the traffic in alcoholic liquors is so affected with a public interest that it should be regulated to the extent of prohibiting all traffic in them, except as hereinafter provided for in this act through the medium of an Iowa liquor control commission by this act created, in which is vested the sole and exclusive authority to purchase alcoholic liquors, as defined herein, for the purpose of re-sale.” And so Iowa became one of the original “monopoly” states and assumed direct control over the wholesale and retail distribution of all alcoholic beverages except beer. Iowa’s first retail liquor stores opened on June 19, 1934 in Des Moines, Marshalltown, Mason City, Atlantic and Oelwein.

In the massive state government reorganization legislation of 1986 (71 GA, Chapter 1246, Sections 724-761), Iowa’s Beer and Liquor Control Department was replaced by the Alcoholic Beverages Division and the state’s 52-year $125-million monopoly that had pumped a $50 million profit into the state’s treasury each year came to an end. The legislation called for the state’s 220 stores to be sold beginning in March 1987, with the state out of the retail liquor business by July. (The state did remain in the wholesale business, however.)Iowa’s state-owned stores were initially established in out-of-the-way places where they were hard to find, and customers had to line up at a counter and order their liquor, not being allowed to browse through the shelves. Until the early 1950s, Iowans had “liquor cards” that were punched by clerks with each liquor purchase so that it was possible to keep track of a resident’s alcoholic purchases. In what became something of a courting custom, parents would demand to see the cards of their daughter’s suitors.

Ultimately, lawmakers who wanted to get Iowa out of the business of retail liquor sales contended that the state shouldn’t be making a profit from liquor while it approved tougher laws on drunken driving and spent millions of dollars on treating people for substance abuse. Opponents said that both liquor prices and taxes would increase if sales were relinquished to the private sector. At the time, fifteen other states controlled the wholesale and retail sales of alcoholic beverages: Alabama, Idaho, Maine, Michigan, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, Washington and West Virginia.

Today, Iowa’s Alcoholic Beverages Division still controls the wholesaling of liquor, as well as the licensing and regulating of the state’s alcoholic beverages industry.